Investing.com – Citi recommends buying following a hawkish Federal Reserve meeting and declining oil prices that are expected to weaken the Norwegian krone.
The Fed meeting under Chair Warsh surprised markets with a hawkish tone, as nine of 18 dots projected a rate hike, the statement emphasized price stability with a stable labor market, and officials gave no future guidance while suggesting the July meeting remains live. The statement was significantly shorter and removed guidance for future easing. Citi’s U.S. economists pushed out their forecast and now expect two cuts in 2026.
Citi’s EUReka model, which uses four fundamental signals including rates, equities, economic changes, and commodity terms of trade, turned bullish on the dollar with three of the signals pro-USD. The bank said in Global Macro Strategy – Views and Trade Ideas – Deal or no deal? a few weeks ago that it wanted to buy USD on dips.
The Norwegian krone strengthened with the rally in oil prices but should give back some strength following the signing of the U.S.–Iran memorandum of understanding. is back below $80 per barrel, while NOK remains 1.5% stronger than pre-Iran levels.
Citi expects USD/NOK to rally as oil prices continue to decline and a hawkish Fed supports the dollar.
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SOURCE LINK : Citi says buy USD/NOK on hawkish Fed, falling oil prices By Investing.com
